MADRID—The only recourse for the European Union, not just with regard to our present crisis, but in order to successfully insert ourselves into the new global reality, is more Europe and less rampant nationalism.

None of our countries—whether large, medium or small—have any true possibility of confronting the current challenges on their own. If each can’t manage on their own, what must we do as one to emerge from this crisis and establish our place in the new global reality?

Naturally, there are anti-European as well as anti-globalization sentiments that tend to take refuge in nationalism. There are those who think nationalist assertion will free them from the common imperatives of governing Europe, or who believe protectionism will enable them to escape addressing Europe’s lack of competitiveness.

This is why Europe must opt between decidedly advancing toward federalization of fiscal and economic policies (and speak with one voice in foreign affairs); or undo, at an exorbitant cost, the long traversed road of European construction. The dominant temptation today to take only short and belated steps that do not resolve problems is generating a growing public frustration.

The construction of a common space among different countries—those of the European Union and, within that, those of the Eurozone—has been accomplished over decades by nation states ceding some elements of sovereignty in order to share them with the rest through inter-governmental institutions and treaties.

For example, member states of the EU have ceded, step by step, their particular agrarian policies in favor of the Common Agricultural Policy. This does not signify a loss of sovereignty for any one state, but rather a sharing to facilitate more beneficial results for all.

In other words, sharing sovereignty does not mean losing it or handing it over to a foreign power, but to enhance one’s own well being by joining with others.

The 17 States of the Eurozone ceded their sovereign currency in order to have the EURO as a single currency and created a European Central Bank with statutory powers to conduct monetary policy and control inflation.

No doubt the momentum of today’s destructive wave of disunity arises out of a loss of memory about how we got to where we are today.

One must remember that this historically unprecedented movement originated as a consequence of two 20th century wars between Europeans, which had the “privilege” of being considered “worldwide.” The end result of this pathology of destructive confrontation set the six founding European countries on a path of mutual well-being—an ethic of peace and cooperation—by sharing those elements (such as coal and steel) which had provoked the violent struggles of the past.

The EU has expanded from those six who signed the Treaty of Rome to the current 27 members, 17 of which share the same currency. Just when it was decided that there would be one currency we forgot a few fundamental elements for the system’s proper operation. A Monetary Union is not possible with divergent fiscal and economic policies. The Treaty was negotiated as an Economic and Monetary Union, but only the Monetary Union was developed, accompanied by the Stability and Growth Pact that was considered sufficient to guarantee the proper functioning of the single currency.

The financial crisis of 2008 demonstrated that this was not sufficient. The diverging fiscal and economic policies produced an “asymmetric clash” among the different countries of the Eurozone, and exacerbated the negative consequences of the crisis.

Countries like Spain that had complied with the Stability and Growth Pact suffered enormously. In the two years since the outbreak of the crisis, Spain went from a budget surplus of more than 2% to a 10% deficit and doubled its public debt of 37% of GDP—which was less than half that of Germany or France.

Further, the statutory limitations of the European Central Bank prevent it from acting as the US Federal Reserve or the Bank of England would. Its exclusive mandate is to control inflation without taking into account growth or employment factors.

Moving Europe forward requires removing this double incoherency by completing a new Treaty that introduces economic governance of the union. We are already moving in this direction with 25 countries having signed the Fiscal Stability Pact. It is beyond obvious that if we have a unified currency and a sole monetary policy, it’s illogical for there to be diverse fiscal and economic policies.

Taking this path means a new point of departure. The current direction, led by Germany, is erroneous. Focusing on austerity and debt reduction alone without a strategy for growth and employment is leading us to ruin.

The Fiscal Stability Pact is an essential objective, but the expectations for compliance are brutal and unnecessary, and provoking an economic contraction which aggravates the crisis. The devastating perception exists among the public that the agreements are being coercively imposed by the stronger powers of Europe—not agreed upon by the members of the European Council and applied by means of the intergovernmental institutions.

The situation is extremely perilous for the future of the EU. The foundations of the European model of cohesion and solidarity are being demolished with policy agreements that are as destructive as they are ineffective in solving this crisis. As witnessed by recent elections all across Europe, from Greece to Spain to France, the people reject the severe consequences of these “anti-crisis” policies which they see as being imposed from outside. This in turn engenders passionate nationalism and anti-Europeanism.

I don’t mean to suggest we don’t need reform in order to gain a competitive edge, nor do I deny the need to adjust public accounts to allow for consistent advancement toward budget stability. But all Europeans must agree to move down this path together.

The Great Paradox: We need to move toward a European economic government. Yet the political steps we are taking toward that end are alienating the public and strengthening nationalism and disunity. It is a dark road for the EU.